February 26, 2016
For twenty four years the
Clintons have orchestrated a conjugal relationship with Wall Street, to the
immense financial benefit of both parties. They have accepted from the
New York banks $68.72 million in campaign contributions for their six political
races, and $8.85 million more in speaking fees. The banks have earned
hundreds of billions of dollars in practices that were once prohibited—until
the Clinton Administration legalized them.
The extraordinary ambition
displayed in the careers of Bill and Hillary Clinton defies description.
They have spent much of their adult lives soliciting money from others for
their own benefit. A 2014 story in Time magazine said this:
“Few in American history have
collected and benefited from so much money in so many ways over such a long
period of time…the Clintons have attracted at least $1.4 billion in
contributions…”
Time failed to dig deeply
enough. A more thoroughly researched expose’ in the Washington Post a
year later doubles the amount to $3 billion.
Ruthless ambition put Bill
Clinton into the White House twice, sent Hillary Clinton twice to the Senate,
and now has her poised on the cusp of the American presidency. It also
made the Clintons one of the wealthiest couples in the nation.
Hillary Clinton’s net worth is
forty five million dollars; Bill Clinton’s is eighty million. Measured by
family wealth, this puts the couple in the top 1% of American households by a
factor of 16 ($7.88 million is the threshold).
The Clintons’ ambition is
reinforced by arrogance. Their behavior in the Monica Lewinsky affair is
only the most glaring example. Sexual frivolities while holding office
are scarcely unusual, having spiced the lives of public figures for centuries,
but if the dalliance is exposed, the scarlet official typically resigns in
shame and scuttles into obscurity. Recall Gary Hart or John Edwards in
modern times. But the Clintons rejected that time-honored code of
decency. In the glare of public scorn they besmirched the office of the
Presidency by barricading themselves in the White House, shamelessly arrogant.
That performance pales,
however, compared to the Clintons’ self-serving transformation of the
Democratic Party, from the champion of working people to the lapdog of Wall
Street—and of corporate America in general. Cleverly the Clintons still
pander to the traditional constituency, but in serving its new clientele the
transformed party abandoned the less fortunate strata of American society,
especially the communities of color.
Bill Clinton figured
prominently in the Democratic Leadership Council, and became the first
president elected in its mold.
After a landslide victory by
the Republicans in 1984, some leading Democrats proposed a new centrist, more
conservative stance for the party. It would be less threatening to
American business interests—and could even attract corporate financial
support. The Democratic Leadership Council was born to promote the new
vision within the party. The DLC gained influence gradually, until Bill
Clinton’s presidency made conservative centrism the Democrats’ defining posture.
As Governor of Arkansas Bill
Clinton chaired the Democratic Leadership Council from 1990 through 1991, and
courting corporate America served him exceedingly well. Supported
by $11.17 million in campaign contributions from Wall Street Mr. Clinton
became the first DLC president in 1993. Hillary Clinton was at his side,
a de facto minister-without-portfolio.
This was the “New Democratic
Party,” President Clinton said, and he soon demonstrated how far to the
right he would move its agenda.
Claiming “the era of big
government is over,” President Clinton promised to “end welfare as we know
it.” And he did, by signing the Personal Responsibility and Work
Opportunity Reconciliation Act. The law bore severely on low income
families, disproportionately communities of color. Clinton took pride
also in the Violent Crime Control and Law Enforcement Act, which led eventually
to an explosion of incarceration, and spawned an industry of private,
for-profit prisons. Once again the law impacted most heavily the black
and Latino communities.
Then it was time to favor
corporate America.
President Clinton promoted
“free trade” with vigor, signing the North American Free Trade Agreement and
strongly supporting the World Trade Organization. “Free trade” was
immensely beneficial to corporate America. Among the nation’s exports,
during the Clinton years, were the manufacturing jobs of 9.2 million American
workers.
Rewarding Wall Street came
next.
President Clinton appointed
Robert Rubin, the Co-chairman of Goldman-Sachs, as his Treasury Secretary in
January of 1995. Mr. Rubin went to work fashioning two laws of stupendous
value to the New York banks, but President Clinton’s first term of office ended
before they could be enacted.
Perhaps sensing the need to
assure Clinton’s re-election, Wall Street saw fit nearly to triple its campaign
contributions—from $11.17 million in 1992 to $28.37 million in 1996.
Continued nicely in office,
Secretary Rubin triumphed with the passage of the Financial Services
Modernization Act of 1999, which repealed the Glass-Steagall legislation of
1933. Now it was legal once more for financial institutions to mix
commercial and investment banking; in essence, to use depositors’ funds for
trading the bank’s own account in the stock market.
A year later President Clinton
signed the Commodity Futures Modernization Act. This law ended the
regulation of derivatives, freeing Wall Street to manufacture mortgage-backed
securities and sell them without restriction; these complex derivatives would
power the “subprime” swindle soon to commence.
Meanwhile, in Clinton’s
Justice Department a deputy Attorney General named Eric Holder in 1999 authored
a memo entitled “Bringing Criminal Charges Against Corporations.” It
became the Holder Doctrine, and after the financial crisis of 2008 it would be
of incalculable value to the Wall Street banks. On leaving the
Administration Mr. Holder joined Covington Burling, the largest law firm in
Washington, D.C.. Among its clients were Morgan Stanley, Citigroup, JP Morgan
Chase, UBS, Bank of New York Mellon, Deutsche Bank, Wells Fargo, and Bank of
America.
Now, perhaps, the shameless
intransigence of the Clintons barricaded in the White House can be
understood. If they scuttled into obscurity, they would forego the
rewarding expressions of gratitude, the return favors they could expect from
Wall Street. (Obscurity would have terminated as well any presidential
ambitions Hillary Clinton might have harbored.)
Wall Street’s gratitude
quickly found expression. When the Clintons left the White House, they
bought a 7-bedroom house near Embassy Row in Washington, with a $1.995 million
mortgage. It must have been the prototype “subprime,” because the
Clintons “…were not only dead broke, but in debt,” as Ms. Clinton later recalled.
Robert Rubin, however, had moved on from the Treasury Department to Citigroup,
where the nearly $2 million in credit was quickly extended
The Clintons did manage the
mortgage payments. Sixteen days after leaving the White House, Mr.
Clinton delivered a speech to the Wall Street firm of Morgan Stanley, for which
he was paid $125,000. That was the first of many speeches he presented to
Wall Street banks in following years. By May of 2015, Mr. Clinton had earned
$1,550,000 from Goldman Sachs, $1,690,000 from UBS, $1,075,000 from Bank of
America, $770,000 from Deutsche Bank,, and $700,000 from Citigroup. In
total, $5,910,000.
But Hillary Clinton has yet to
embark on her own political career.
On leaving the White House the
Clintons did not occupy their house in Washington, but instead moved into a
$1.7 million, 5-bedroom home in Chappaqua, New York. Why New York?
The six previous ex-presidents all returned to their home states to live
quietly out of the public eye.
But Hillary Clinton
wanted to run for the Senate, and from New York not Arkansas. Was Wall
Street’s congeniality too gratifying to terminate?
It was not terminated.
The Wall Street banks underwrote Ms. Clinton’s Senatorial ambition, contributing
$2.13 million to her campaign. Among the congenial banks were Citigroup,
Goldman Sachs, UBS, JP Morgan Chase, CIBC, and Credit Suisse.
As the new century unfolded
the sub-prime mortgage scam enabled by Clinton’s “modernization” laws inflated
an epic bubble in real estate prices. In 2008 the bubble deflated.
Property values collapsed, followed by the American economy. $13 trillion
in Americans’ household wealth disappeared. Nine million workers lost
their jobs. Five million families were evicted from their homes.
This is what Bill Clinton’s New Democratic Party had wrought, and among
the traditional constituents, now betrayed, the communities of color fared the
worst.
Many New York banks faced
insolvency, their portfolios bloated with nearly worthless mortgage-based
derivatives—so-called “troubled assets.”
The banks had a champion,
however. President George Bush, taking a cue from Bill Clinton, also
appointed a Goldman Sachs CEO as his Treasury Secretary. Henry Paulson
wasted no time in obligating the American taxpayers to cover the losses of the
New York banks—his own Goldman Sachs and the rest of the swindlers. The Emergency
Economic Stabilization Act of 2008 —the “Troubled Asset Relief Program”—was
signed into law on October 1 by President Bush
The law appropriated $700
billion for Mr. Paulson to buy the banks’ depressed securities.
Senator Clinton voted in favor
of the bill, telling a New York radio station the next day, “I think the banks
of New York…are probably the biggest winners in this…”.
Mr. Paulson started buying
troubled assets immediately, and Senator Clinton’s observation proved
correct. A Congressional oversight panel later discovered Mr. Paulson was
substantially overpaying the banks: the Treasury bought one package of “troubled
assets” for $254 billion, the market value of which was $176 billion.
Treasury paid Citigroup $25 billion for securities worth $15.5 billion.
And so it went. A partisan Democrat might say, “What else would you
expect from the Bush Administration?”
But the 2008 presidential
campaign was underway. The Democrats’ slate of candidates included
Hillary Clinton and Barack Obama. Wall Street was impressed with both
candidates. Goldman Sachs contributed $1,034,615 to Mr. Obama’s campaign;
JP Morgan Chase $847,855; Citigroup $755,057; UBS $534,166; and Morgan Stanley
$528,182. $3.7 million in total. But Wall Street was more impressed
with Ms. Clinton: her take from the banks was $14.6 million.
Barack Obama took office as
another “New Democrat,” imprinted by the legacy of Bill Clinton’s presidency.
Wall Street’s $3.7 million hedge would not be wasted.
Never disclosed in Mr. Obama’s
campaigning however (or Hillary Clinton’s), was the transformation of the
Democratic party Bill Clinton had achieved. The Wall Street banks who
poured $18.3 million into the contest would be rewarded by the Obama
Administration in truly spectacular ways, but the historic constituency of the
working families of America and its communities of color would be largely
ignored. Deliberately kept ignorant, however, that traditional
constituency voted Mr. Obama into office, the black community in particular
with unprecedented enthusiasm.
The two most important Cabinet
posts, for Wall Street’s interests, were Treasury and Justice. President Obama
filled both with former Clinton appointees: Mr. Timothy Geithner to head
the Treasury Department and Mr. Eric Holder to be Attorney General. The
continuity of favoritism for Wall Street was assured.
Timothy Geithner was the
obligatory Wall Streeter, president of the Federal Reserve Bank of New York at
the time of his appointment. Eric Holder arrived from Covington Burling,
Wall Street’s Washington law firm.
Hillary Clinton became
Secretary of State. Wall Street’s investment in her would not be wasted,
either.
Now it was Mr. Geithner’s turn
to administer the Troubled Asset Relief Program. He was no less effective
than Mr. Paulson in showering Wall Street with taxpayers’ money.
Mr. Neil Barofsky, a federal
prosecutor, was appointed Special Inspector General of the Troubled Asset
Relief Program. His job was to audit the execution of the law, to secure
against fraud, and to hold the banks accountable. Thwarted at every turn
by Secretary Geithner, Barofsky finally resigned in disgust, and wrote an expose’
entitled Bailout:
An Inside Account of How Washington Abandoned Main Street While Rescuing Wall
Street. The book jacket says this:
Barofsky discloses how, in
serving the interests of the banks, Secretary Geithner…worked with Wall Street
executives to design programs that would funnel vast amounts of taxpayer money
to their firms, [allowing] them to game the markets and make huge amounts of
money, with almost no accountability….while repeatedly fighting Barofsky’s
efforts to put the necessary fraud protections in place.
While Mr. Geithner was
twisting TARP to the banks’ financial advantage, the Justice Department was
shielding their executives from any sort of penalties, either fines or
incarceration.
Beyond question the New York
banks were guilty of massive criminal behavior, but Attorney General Holder
dusted off the directive he’d written eight years previously in the Clinton
Administration. The Holder Doctrine directed the Department of Justice to
consider “collateral consequences” in its prosecutions. If such
consequences were sufficient, criminal indictments were to be rejected in favor
of other remedies.
Mr. Holder’s Department chose,
therefore, to negotiate with each bank a financial penalty to be assessed in
lieu of criminal proceedings. The agreements required no admission of
guilt, they guaranteed no further prosecution, and the documentation of illegal
behavior was permanently sealed.
The penalties were paid with
corporate funds. (Goldman Sachs’ penalty was $550 million: it could
recover that much in about three weeks of trading.) No corporate
executives were jailed, no damning personal records of felonious behavior were
established, no personal fines levied, no salaries reduced, no bonuses
denied. In April of 2015, having obliterated Wall Street’s lawlessness,
Mr. Holder left the Obama Administration and returned to Covington Burling.
Today the banks are larger and
more powerful than ever.
The Obama Administration
granted one more relatively minor and specific favor to the financial
industry. A few weeks after her swearing in, Secretary of State Clinton
was called to Switzerland by the Swiss Foreign Minister. They discussed a
lawsuit brought by the U.S. Internal Revenue Service against UBS, the Swiss
banking international colossus (761 locations in the U.S.).
Back in Washington Secretary
Clinton interceded. The impact of the suit was reduced by 90%.
In subsequent years UBS paid
Bill Clinton $1.5 million in speaking fees, for eleven separate
appearances. Hillary Clinton earned $225,000 for another one. Also
in subsequent years UBS contributed $540,000 to the Clinton Foundation.
Secretary Clinton resigned her
position at the end of President Obama’s first term, perhaps to prepare and
raise money for another presidential campaign.
Since then she has earned $2.9
million in speaking fees from Goldman Sachs, Bank of America/Merrill Lynch,
Morgan Stanley, Deutsche Bank, Ameriprise, Apollo Management Holdings, CIBC,
Fidelity Investments, Golden Tree Asset Management, and UBS.
Hillary Clinton announced her
presidential candidacy on April 12, 2015. By September 30, Wall Street
banks had contributed to her campaign a total of $6.42 million….
During the 24 years of the
last three Administrations in Washington, Wall Street flourished while savaging
the American economy, the American taxpayers, and the law.
The Clinton Administration,
with a Treasury Secretary from Wall Street, passed laws enabling the banks to
launch a financial skyrocket. The Bush Administration, with a Treasury
Secretary from Wall Street, covered their losses with taxpayers’ money when the
rocket fell to earth. The Obama Administration, with a Treasury
Secretary from Wall Street and a Wall Street Attorney General as well, granted
vast financial favors to the banks and absolved them of criminal behavior.
During all of those years the
Clintons benefited immensely from Wall Street’s political contributions: $11.17
million for Bill’s 1992 campaign; $28.37 million for his 1996 re-election;
$2.13 million for Hillary’s 2000 run for the Senate; $6.02 million for her 2006
re-election; and $14.61 million for her first presidential campaign. And
they’ve been paid $8.85 million by the financial industry in speaking fees.
The intimate interplay of
ambition and greed between the Clintons and Wall Street has continued for
nearly a quarter century. It is a tawdry history, ignored or trivialized
by the Clintons, anxious to obscure it.
But now with a fresh infusion
from the New York banks of $6.42 million and counting, Hillary Clinton is
running for president once again.
Speaking on July 13, 2015, she
said this:
“Our banking system is still
too complex and too risky … While institutions have paid large fines….too often
it has seemed that the human beings responsible get off with limited
consequences – or none at all, even when they’ve already pocketed the gains.
This is wrong, and on my watch, it will change.”
Ms. Clinton expects us,
apparently, to believe her.
Author’s note: For the sake of
an uncluttered text, citations have been omitted. They will be furnished
if requested.
Richard W. Behan lives in
Corvallis, Oregon. He can be reached at: rwbehan@comcast.net.
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